Final answer:
The statement that the bonus method is used when the total agreed capital is more than the total contributed capital is false. This method is used when a new partner contributes capital in excess of the share in net assets they're entitled to, rewarding existing partners with a bonus.
Step-by-step explanation:
In the context of admission by investment, the statement that the bonus method is used when the total agreed capital is more than the total contributed capital is false. The bonus method is typically used in scenarios where the new partner brings in more than the value of the share in the net assets of the partnership they are acquiring. This results in a bonus to the existing partners, which is then written off against the capital accounts according to the existing profit-sharing ratio.
When the bonus method is applied, it's important to carefully allocate the bonus among the partners and adjust their capital accounts to reflect the bonus and the new partner's capital contribution accurately. The objective is to ensure an equitable distribution of the adjusted net assets among all partners.